XL Claim Example – Food Distribution Center

The construction manager of a construction, renovation and expansion project for a food distribution center hired an insured to construct and install a new refrigeration system at the facility. The insured was cutting a section of pipe when approximately 50 pounds of ammonia was released as a gaseous cloud inside the facility. It took over an hour to contain the release and 4 workers and 2 medical technicians were hospitalized.

XL quickly responded with a defense for the contractor. Coverage was available under the pollution liability coverage part of the combined pollution and professional liability form. It was also determined that $100,000 of pollution coverage was available in the general liability policy. Additionally, the claim investigation revealed that the facility owner was not a “passive” observer as originally reported since his “refrigeration expert” provided guidance and advice during the line cutting operation.

XL facilitated a reduction in the initial demand based on the facility owner’s refrigeration expert’s involvement. The general liability carrier paid their $100,000 pollution limit; however, that was not nearly enough to cover the damages so the XL Insurance policy covered remaining payments and obtained a full release of liability for the insured. Total cost was over $500,000.

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